Beginning inventory, purchases, and sales for an inventory item are as follows:

DateLine Item DescriptionUnits and CostSep. 1

Beginning Inventory

31 units @ $22

5

Sale

18 units

17

Purchase

33 units @ $24

30

Sale

33 units

Assuming a perpetual inventory system and the first-in, first-out method:

**a.** Determine the cost of goods sold for the September 30 sale.
fill in the blank 1 of 2$

**b.** Determine the inventory on September 30.
fill in the blank 2 of 2$

We will solve this step by step to determine **cost of goods sold (COGS)** for the September 30 sale and **ending inventory** using the **First-In, First-Out (FIFO)** method.

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### **Step 1: Track Inventory Changes and COGS under FIFO**  
Since we are using FIFO, the oldest inventory is sold first. Below is the sequence of events:

- **Beginning Inventory (Sep 1):**  
  31 units @ $22 each = 31 × 22 = **$682**

- **Sep 5 Sale: 18 units**  
  - Use 18 units from beginning inventory (31 units @ $22).
  - COGS = 18 × 22 = **$396**

  - **Remaining Inventory after Sep 5:**  
    31 - 18 = 13 units @ $22 each = **$286**

- **Sep 17 Purchase: 33 units @ $24 each**  
  - Add 33 units @ $24 = 33 × 24 = **$792**

  - **Total Inventory after Sep 17:**  
    13 units @ $22 = 286  
    33 units @ $24 = 792  
    **Total = 13 + 33 = 46 units**  
    **Total value = 286 + 792 = $1,078**

- **Sep 30 Sale: 33 units**  
  - Follow FIFO (sell older inventory first):
    - 13 units @ $22 = 13 × 22 = **$286**
    - Remaining 33 - 13 = 20 units taken from new batch (33 units @ $24):
      20 × 24 = **$480**

  - **COGS for Sep 30 Sale = 286 + 480 = $766**

---

### **Step 2: Calculate Ending Inventory on September 30**  
After the sale on Sep 30, we had 33 units and sold 33 units.  
The inventory now looks like this:

- Used 13 units @ $22  
- Used 20 units from 33 units @ $24  
  **Remaining Inventory = 33 - 20 = 13 units @ $24**

  **Total value of ending inventory = 13 × 24 = $312**

---

### **Answers**  
**a.** Cost of Goods Sold (COGS) for Sep 30 Sale = **$766**  
**b.** Ending Inventory on Sep 30 = **$312**

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Do you want more details or have further questions?  

Here are 5 related questions:  
1. What is the difference between FIFO and LIFO?  
2. How does perpetual inventory differ from periodic inventory?  
3. How would COGS change if LIFO were used?  
4. Why is FIFO commonly used for perishable goods?  
5. How can inflation impact FIFO-based inventory valuation?

**Tip:** FIFO generally results in lower COGS and higher profits during periods of rising prices.

Beginning inventory, purchases, and sales for an inventory item are as follows:

DateLine Item DescriptionUnits and CostSep. 1

Beginning Inventory

31 units @ $22

5

Sale

18 units

17

Purchase

33 units @ $24

30

Sale

33 units

Assuming a perpetual inventory system and the first-in, first-out method:

a. Determine the cost of goods sold for the September 30 sale.

b. Determine the inventory on September 30.

Understand how to calculate the Cost of Goods Sold (COGS) and ending inventory for an inventory item using the FIFO method within a perpetual inventory system. This problem includes an analysis of beginning inventory, purchases, and sales across multiple dates in September, with a step-by-step breakdown suitable for college-level accounting students.

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